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International Journal of Engineering and Management Sciences (IJEMS) Vol. 2. (2017). No. 3.
DOI: 10.21791/IJEMS.2017.3.4.
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The role of logistics management in public services –
research plan
L. BUICS
István Széchenyi University, Faculty of Economics, Department Leadership and Organization Communication,
buicslaszlo@gmail.com
Abstract. Public services and logistics are generally treated as different fields, but the tools of logistics management
with the help of the Unified Services Theory can be used for the benefit of the public services. The aim of this
theoretical paper is to generally introduce my topic and relevance of the research on which my PhD thesis will be
based in the future. The expectations in the advanced, globalized world are pushing governments to find new
methods to fulfil the needs of the citizens while keeping up or even increase efficiency and effectiveness. I believe
that from a certain viewpoint the public administration system can be considered as a large scale supply network,
and I am particularly interested in how we could apply logistical methods in public services to increase efficiency
and effectiveness while simultaneously increase customer satisfaction. In this particular paper I would like to
present how I see the connections between the concept of New Public management and the Unified Services Theory.
I would like to show the similarities between them and how they could complete each other in order to serve as a
background for later logistics related approaches and researches within the domain of public services.
Introduction
There are several reasons why I chose for my topic the area of public services, and the role of logistics
management in public services. I am a graduated public service manager and logistics manager. The
functions and behaviour of the public area and the logistics services were always within my interests
and during my learning I gathered specified knowledge attached to these sectors.
My goal is to learn and research as much as possible about the possibilities of joining these two fields
which are both within my interests, and use the logistics for the benefit of public services. I think this
would be a great achievement and as I realized I am not the only one who thinks that way. For example
the concept of New Public Management follows similar principles using and integrating other areas of
the financial and business world to enhance the efficiency of public services. The field of logistics
management can also be used for the very same reason resulting in very powerful and effective
solutions
To properly circle around my topic first I want to explore the basic tools of both public services and
logistics management and the possibilities of joining these fields in order to find new ways to improve
public services and services in general with these logistics related approaches and tools. In order to do
that there are several angles which I would like to examine closer by reviewing the relevant literature
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than I would like to examine and analyze existing methods and after that I will search for available
data to examine and possibly making interviews and questionnaires to gather more data.
First I would like to study the definition of services and how we can define them in different
environments, than I would like to examine and use the benefits of the Unified Services Theory as a
tool to redefine services and public services as processes in with customers (the citizens) have key
roles. After that I would like to study the value creation and the definition of public value.
As we will see logistics management can be really useful for public services if we embrace the concept
of the Unified Services Theory, to see services as processes in which customers are playing key roles.
While public services are mostly considered as special types of services, the tools of other fields could
be very effective to improve them, and there are several methods which are already trying to bring
necessary changes into life, from which the concept of New Public Management seems to be the most
exciting for me.
1. The role of public services, goals and tools
How does the government work? What does it do and why? What kind of services does it offer for its
citizens and how effective these services are in everyday life? Usually most people care about these
services because they are important for our life. If someone has something to take care of and finds the
right service at the right place, at the right time, everything is all right. But with this statement I am
already a little ahead myself.
First of all we should clarify how we define services? What is a service? There are many definitions
which are trying to give a universal explanation. According to my studies a service is more or less an
abstract resource. It can be produced but it cannot be stored after production. It represents a
capability to perform a task by a provider if a requester asks for it. It also represents a value of
intangible products such as accounting, banking, education, insurance, expertise, medical treatment, or
transportation.
Sometimes services are difficult to identify because they are closely associated with a good, but usually
during implementation when services are sold no transfer of possession or ownership takes place and
services cannot be stored or transported. They only come into existence at the time they are bought
and consumed. As we can see it is a real challenge to define what services are and identifying what
makes service businesses different from any other business.
The government offers many services what people need. But this offer seems to be completely natural
for everyone and no one think about how these services are planned and executed, if they are
available. They have to be available at all time, because if they are not, that could cause major
problems. And even if they are available, the efficiency, effectiveness and usefulness could be
questioned both by the service providers and the people who use these services.
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1.1. Public services
First of all we must clarify what are the public services. Basically those institutions that are maintained
by the government to provide general services for the citizens are considered as public institutions
and the offered services are public services. In most of the developed countries the term of public
services often include healthcare services, emergency services, education, postal service, security and
infrastructure on many fields such as transportation, water supply or energy. The number of publicly
provided services are different in every state but even if they are not publicly provided or financed, the
usually are highly regulated be the government for social or political reasons.
Besides these overall services the government provides many more additional services which are
essential to the citizen’s everyday life and are available to everyone regardless of income or physical or
mental ability. If our driving licence or personal identification expires or we would like to claim a
passport to visit a foreign country we use public services as well. These services are performed by civil
servants or public employees who are hired by the elected officials.
Most public services are under-provided by the market or exclusively provided by the government
itself and because the characteristics of the service term itself, they do not involve manufacturing
goods. They may be provided by local or national monopolies, especially in sectors which are natural
monopolies.
To secure the availability of these governmental services the state is forced to build and maintain a
state-wide supporting infrastructure. It is necessary to ensure the local accessibility trough local
offices. The public administration offices are conduits between the government and the citizens, and
these local access points where the services can be accessed are considered the most common
interface between the people and the state. And because of this their efficiency and functioning
capability shapes people’s thoughts about the government itself. At a national level, public services
underpin human welfare and economic growth. To supply and provide these public services without
any major problems are key tasks for the government. And as I mentioned people care about public
services and depend on them being delivered well.
Public services need to be centred on citizens, and need to be responsive to their needs, while
delivered with integrity. Promoting greater transparency and enabling ordinary citizens to assess the
quality, adequacy and effectiveness of basic services, to voice their needs and preferences and to
become involved in innovation offers an opportunity to enable better use of public funds, and improve
service delivery. [8]
Public services account for a large proportion of government budgets, but increased spending has
often not been matched by improvements in outcomes. In the worst case, if corruption raises its head,
it could lead to declining standards which leads to money intended for books, teachers, medical
supplies or infrastructure being siphoned off by officials or private contractors. Data showed that just
increasing resources, equipment, financial, or personnel, does not guarantee that the quality of
education or health care will improve. [13]
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The quality of service delivery is critical both for the government and the citizens. We are living in the
21. century but the way how most of the public services are delivered was designed in a previous era
to fulfil the needs of that era. Because of this most governments struggle to respond to present day
needs driven by complex challenges, such as those created by aging populations, chronic health
conditions, mega cities and poverty and inequality. Even if the integrity of public resource flows can be
secured, these new challenges require new solutions and completely new approaches.
Public services are traditionally organized in a way that puts the public in a passive role, as the
recipient of a standardised service. But life is changing and so do the people. The innovation of other
areas such as travel, communications, media make deep impact on how we see our everyday life.
Nowadays citizens are connected like never before and have the skill sets and passion to solve
problems, and are used to giving feedback on the goods and services they receive, and playing an
active role in making choices. With such an approach and high expectations from people the old school
bureaucratic processes and the lack of fast and efficient solutions often turn people against the
government leaving permanent bad impressions. For example government employees are often
accused by not working hard enough. [9]
As a matter of fact the governments feel the pressure and they are already experimenting with new
solutions, and they try to redesign different parts of the system to meet the expectations. Trying to
involve the citizens and make their role from completely passive to at least partially active cannot be
done in a day. It requires both long time and long term solutions. But at the end citizens can play a
more active role as a user community for public services. The new technological solutions and the
easily available data enable a different kind of participation. [3]
However translating information into action seems to be a difficult challenge. The relationships
between citizens, policy-makers, program managers, and service providers are complicated and are
not easily altered through a single intervention, such as an information campaign or scorecard
exercise. [9]
1.2. New Public Management
As I mentioned before traditionally governments never thought about citizens as customers and
because of this the way how public services were executed excluded the citizens as potential feedback
resources. But in the last decades of the 20th century as our technology and society developed
governments realized the necessity to develop new ways and methods of the services to maintain
efficiency and serve the changing needs of citizens in order to secure public satisfaction.
One of the modern public administration approaches is what we call New Public Management.
Basically in this case different kinds of management techniques from the private sectors are taken
over and used in the public sector for the benefit of the government.
The basics of this concept can be summarized in these principles: [6]
suppression of the role of the government, dismantling its functions and increasing the
involvement of private market participants
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Effectiveness, efficiency and economy in government (the less is sometimes more)
Decentralization of decision-making, the transfer of powers to the lower levels of political
decision-making and managerial levels (let the driver drive)
The reduction of hierarchical levels of the administration, by creating quasi-autonomous (agency-
type) structures.
“Marketization”, introducing market-type mechanisms and methods in the creation of public
services such as outsourcing tasks, complex outsourcing of public services, privatization
"Managerialism", introducing corporate management techniques in public administration, such as
performance measurement, performance-based assessment, remuneration, strategic planning,
benchmarking, and management control systems.
Another main objective of the New Public Management is the reform and deregulation of the
complicated legal system
The foundations of the New Public Management were laid off in the eighties mostly in England and
Australia and until the nineties it was mostly seen as a developed country, particularly Anglo-Saxon
phenomenon. But at the beginning of the nineties the popularity of the New Public Management
started to grow and several variants of NPM techniques appeared in some developing and transitional
economies, such as management decentralization within public services, downsizing and performance
contracting with the help of autonomous agency creation, budget and financial control devolution and
increasing the performance, outputs and customer orientation in the public services.
New Public Management reforms have been driven by a combination of economic, social, political and
technological factors. A common feature of countries going down the NPM route has been the
experience of economic and fiscal crises, which triggered the quest for efficiency and for ways to cut
the cost of delivering public services. [2]
As we can see the concept of New Public Management can be considered as a set of ideas with the
common effort to extend the principles of economic sectors to the state (public) institutions while
citizens of the state are also treated as customers. Its goal is the economic modernization of both the
public institutions and the state’s to create efficient public administration processes.
The NPM concept is not simply a corporate management approach to the public administration; it is
also an effort to achieve higher rate of efficiency and effectiveness in the operations of the state, while
it prefers the neo-liberal state concept, which only supplies the most important social responsibilities.
The NPM methods require both economic performance and cost-oriented thinking, and they try to
achieve with minimal cost the maximum performance.
But in order to be effective we have to define the goals and we have to design an acceptable control
(monitoring) system. Publicity can be a major for of control in this case. But citizens can be effective
contributors only if they have enough knowledge about the way how public service processes work.
One of the main factors of the New Public Management is the thought that the public administration
serves the people and not the other way around. Features of the customer-friendly administration:
understandable regulation
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deregulation of insecure or unnecessary rules
simple procedures
quality improvement of services
information windows in offices
customers-friendly environments in the offices
2. Unified Services Theory
To understand the Unified Services Theory we must embrace the thought that every service can be
considered as a process. From this viewpoint we can see services as production processes where each
customer provides additional input for the production. With non-service processes, groups of
customers may contribute ideas to the design of the product, but individual customers’ only
participation is to select, pay for, and consume the output. [10]
“A serious problem occurs when the inability to understand services leads to treating them as a
peculiar case of manufacturing. This naivety is illustrated by the practice of those who refer to services
as “non-manufacturing” and/or who maintain that service businesses should be run by manufacturing
paradigms” [10]
1. Figure: Customer’s passive and active role in a non-service and service model
(Source: own compilation based on resources)
From the viewpoint of the Unified Services Theory the customer provides significant inputs into the
production process of a service. During traditional product manufacturing groups of customers may
contribute ideas to the design of the product as test audience, however an individual normal customer
can only select and consume the output. [10]
As seen on the first figure in the Unified Services Theory the customer has a key role in the service
system and support the process with additional information to create more added values for the
benefit of both the future customers and the owners of the service operation.
According to traditional thinking when we are speaking about manufacturing something only the
suppliers provide inputs, and the customers simply buy and consume the outputs. In this case the
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customers provide no input at all just simply pay for the given outputs. By contrast the Unified
Services Theory claims that every manufacturing production and traditional service can be considered
as a process in which the customers can provide additional input and may even contribute ideas to the
design of the product. Of course in normal cases one customer will not redeem the world and change
the particular attributions of the product he pays for, but the additional information in general can
cause changes in the design of the overall service or in the overall service process.
Because the Unified Services Theory is based on the idea of customer inputs it is necessary to define
who the customer is. Generally, the customer is the individual or entity who directly or indirectly
decides whether or not the firm shall be compensated for production. With services a company’s
production process can be defined as company effort to add value to customer inputs. Company effort
in preparation for production is the pre-production process. When the production process concludes
the customer use the production outcome to continue to add value. This post-production process is
primarily based on customer action. Often, well-designed service outcomes will enable the customer to
create value in the post-production process. This principle occurs because the only ways companies
can add value is through efforts and through outputs. Efforts can add value directly to customer inputs
(given by the Unified Services Theory). Outputs, or outcomes, can allow customers to add value after
the company’s production efforts are complete. [10]
In the 20th century the main focus was on the technological innovations and on the methods how
these innovations can be used in production and product development for commercializing ideas and
inventions mainly in the manufacturing industry. However in today’s world the role of services is
growing and so grows their economical impact as well. Because of this the importance of
understanding service innovation concepts and practices is unavoidable. As we can see Unified
Services Theory brings us one step closer to understanding the nature of services and the intangible
role of customers in the processes while it points out that in our developing world the more and more
dynamic interactions among technological and human systems inevitably lead to managerial and
organizational changes in services.
3. The role of logistics, goals and tools
We know that with the help of the Unified Services Theory we are able to see any kind of service as a
process. Public services supplied by the government are no different. We can see them as processes as
well. After this recognition the concept of New Public management gives us a powerful toolbox which
can be used on many ways to make public services better than they were before.
For me this means that I can fill up that toolbox with the tools of logistics management and methods
used in private business. Every kind of process needs supply and has a certain demand. I am quite
interested in the possible ways of how we can change and develop public services, or any kind of
services with logistics and a supply chain management approach.
With logistics knowledge we can manipulate and change the way how inputs are handled before
processing, during processing and after processing. But processing something only makes sense if
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there is a need for that output “product”. This demand is generated by customers or in our case by the
citizens of the state. This is where marketing comes into the picture.
In any business or factory one of the major questions is: what do our customers want and how can we
fulfil their needs? First of all we have to know what they want in order to produce the right product
with the right specifications. Second of all we have to introduce our product to as much customers as
possible to make them want what we produce.
After we know exactly what we have to produce to fulfil the needs of our customers the next step is to
figure out how we should produce the exact „product” our customers need. The elements of logistics
management can give us several cues and methods what we can use to effectively operate public
services.
3.1. Logistics management in general
In case of public services maybe it seems a little odd to talk about logistics management but it makes
more sense than we may think at the first moment.
We could define logistics as a business planning framework for the management of material, service,
information and capital flows. It includes the increasingly complex information, communication and
control systems required in today's business environment
Generally the task of logistics is to ensure that the right information, material, energy and people be at
the right place, in the right time and quality. This is what we call the 9R principle. With other worlds
we can say that it is an organization and implementation of a complex operation to manage the flow of
things between the point of origin and the point of consumption in order to meet requirements of
customers or corporations. Some people call it a separate interdisciplinary science which deals with
every logistics related social sciences and tries to alloy them together for the very same goal.
If we are speaking about logistics activities within a company we usually use the term inbound
logistics which is one of the primary processes of logistics, concentrating on purchasing and arranging
the inbound movement of materials, parts, or finished inventory from suppliers to manufacturing or
assembly plants, warehouses, or retail stores.
If we are speaking about logistics activities outside a company we usually use the term outbound
logistics which is the process related to the storage and movement of the final product and the related
information flows from the end of the production line to the end user.
The resources managed in logistics can include physical items such as food, materials, animals,
equipment, and liquids; as well as abstract items, such as time and information. The logistics of
physical items usually involves the integration of information flow, material handling, production,
packaging, inventory, transportation, warehousing, and often security. [12]
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3.2. Logistics in public services
The reason why I am talking about supply chains is because from my viewpoint as I can see the
government and its infrastructure can be considered as a large supply network as well with several
major nods through which information and material flows simultaneously in every directions. The goal
of every supply chain and its participants is to create value with the purpose of fulfilling the needs of
the customers. Because of this we can speak about value chains and demand chains as well.
According to the traditional assumption governments do not have customers, and thus no competitors,
so the tools of logistics management or marketing are considered as unnecessary functions of public
management. But as we discussed before governments are also service providers and have various
types of customers such as the residents, taxpayers, investors, property owners, visitors, small
business owners, and other funders and recipients of public services. It is true that in most cases the
government services are monopolies with no significant competitors so the citizens are captured and
forced to use the services what the government offer to them.
And because of this monopolistic status the governments are not forced to act and change quickly as
other businesses on the private markets. Many citizens are critical of the government because for
example the lack of needed services, and specific complaints often include the belief that there is a
huge discrepancy between the paid taxes and the value of received services in exchange.
As we can see under these conditions logistic or marketing solutions can be major assets for a public
agency that wants to meet citizen needs and deliver real value. Every public institute can benefit from
applying a more logistic related approach to their tasks to solve problems and meet the expectations.
Governments have several challenges, they have to meet the expectations of improved service delivery
while at the same time old and new services and programs often have budgetary constraints, but
despite the difficulties with different management models and tools governments can deliver more
quality, speed, efficiency, convenience and fairness to its citizens.
The public sector is different from the private sector but it also part of the economic life and deals with
production, delivery, and allocation of basic public goods and services on different levels. Of course the
customer-centric philosophy will require much more flexibility and the government has to take into
account the individual needs much more in order to ensure the development of the public services.
Summary
As the world changes and develops so do the people who live in it. Governments have to keep the pace
and adjust to these changes. We can observe the emerge of new thoughts and methods in public
administration performance of government decision-making and administrative tasks more and more
as the social and collective awareness is gaining more ground. Besides the market values like financial
efficiency, economy, the community values become more and more important too.
Whether we are speaking about a lean or a broad government administration, we must move with the
times and this can only be achieved with continuous development and with applying new techniques.
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In my opinion as we can see that modern logistics management has the necessary tools and it can help
in modernizing public administration if we can learn how to use it properly.
As a logistics manager I have a certain viewpoint from which sometimes every action can be seen as a
process, even services. This approach can be useful in many areas of life including public management,
which is another area of my interest. The Unified Services Theory gives us a special framework in
which we can see every kind of public services as processes and with the help of New Public
Management we can handle these processes with different kind of tools borrowed from the private
sector.
The New Public management is not a framework itself, it is more like a conception which is not only
allows but even encourages us to use the tools of marketing, logistics management and other areas as
instruments to restructure and reorganize public services in order to make them more efficient, cost-
effective and to better fulfil the needs of the citizens. The public sector and the private sector are
traditionally considered as two entirely different areas but New Public Management aims to change
that viewpoint and tries to use tools of the private sector to make significant changes.
As we can see both the concept of New Public Management aims to handle citizens as customers and
tries to increase their satisfaction by taking over new methods from other managerial areas. But in
order to satisfy customers we have to figure out their needs and the best way to do that is to involve
them into the value creation from the beginning. The Unified Services Theory follows this exact path
by not just involving customers but reinterpreting the concept of service delivery itself by seeing
services as special kind of production processes which are creating value. In my opinion by alloying
the two concepts and building on both of their strengths this we can seek new ideas to increase
satisfaction with a logistics related approach.
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